Barcelona Traction, Light, and Power Company, Ltd was a corporation incorporated in Canada, with Toronto headquarters, that made and supplied electricity in Spain.

The idea of a "diplomatic protection" of shareholders was unsound because it would create confusion and insecurity in economic relations as shares are "widely scattered and frequently change hands".

Padilla Nervo J wrote the following: The history of the responsibility of States in respect to the treatment of foreign nationals is the history of abuses, illegal interference in the domestic jurisdiction of weaker States, unjust claims, threats and even military aggression under the flag of exercising rights of protection, and the imposing of sanctions in order to oblige a government to make the reparations demanded.

Against the pressure of diplomatic protection, weaker States could do no more than to preserve and defend a principle of international law, while giving way under the guise of accepting friendly settlements, either giving the compensation demanded or by establishing claims commissions which had as a point of departure the acceptance of responsibility for acts or omissions, where the government was, neither in fact nor in law, really responsible.

In the written and in the oral pleadings the Applicant has made reference, in support of his thesis, to arbitral decisions of claims commissions—among others those between Mexico and the United States, 1923.

In the case of the Rosa Gelbtrunk claim between Salvador and the United States, the President of the arbitration commission expressed a view which may summarize the position of foreigners in a country where they are resident.

The decision touches, however, one aspect of a much wider problem: the existence of international minimum standards, by which, regarding foreigners, territorial jurisdiction is limited." ...

Perhaps modern international business practice has a tendency to be soft and partial towards the powerful and the rich, but no rule of law could be built on such flimsy bases.